Home » DEDUCTIONS » AUTO (Page 2)
Category Archives: AUTO
WooHoo Mileage Rate Increases to 55.5 Cents for Last 6 Months of Year
Katherman Kitts & Co. LLP Mileage Rates Update
WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.
“This year’s increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman. “We are taking this step so the reimbursement rate will be fair to taxpayers.”
While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.
The new rates are contained in Announcement 2011-40 on the optional standard mileage rates.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Mileage Rate Changes
| Purpose | Rates 1/1 through 6/30/11 | Rates 7/1 through 12/31/11 |
| Business | 51 | 55.5 |
| Medical/Moving | 19 | 23.5 |
| Charitable | 14 | 14 |
Related articles
- Standard Mileage Rates (whiteheadcpas.wordpress.com)
- Representatives ask IRS for mid-year hike of standard mileage rates (dontmesswithtaxes.typepad.com)
- IRS not likely to bump up optional standard mileage deduction rates … yet (dontmesswithtaxes.typepad.com)
2011 Auto Depreciation Deduction Limitations – (and a classic video from The Cars)
By Stacie Clifford Kitts, CPA
Well, I’m a bit late in the posting of this Revenue Procedure released March 1 by the Internal Revenue Service. But in my defense, we are a tiny bit busy this time of year.
Revenue Procedure 2011-21 provides the depreciation deduction limitations for owners of passenger automobiles (including trucks and vans) first placed in service during calendar year 2011 and the amount to be included in income by lessees of passenger automobiles first leased during calendar year 2011. These depreciation deduction limitations and income inclusion amounts are updated annually pursuant to section 280F to reflect the automobile price inflation adjustments. Rev. Proc. 2011-21 also modifies Rev. Proc. 2010-18, to increase the depreciation limitations and lessee inclusion amounts for passenger automobiles first placed in service or leased in 2010 by taxpayers claiming the section 168(k) additional first year depreciation deduction pursuant to the Small Business Jobs Act of 2010.
Revenue Procedure 2011-21 will appear in IRB 2011-12 dated March 21, 2010.
Here is a recap of the depreciation schedules included in the Revenue Procedure.
Depreciation table for passenger automobiles (that are not trucks or vans) placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation deduction applies:
1st tax year $11,060
2nd tax year $4,900
3rd tax year $2,950
Each succeeding year $1,775
Depreciation table for trucks and vans placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation applies:
1s tax year $11,260
2nd tax year $5,200
3rd tax year $3,150
Each succeeding year $1,875
Depreciation table for passenger automobiles (that are not trucks or vans) placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation deduction does not apply:
1s tax year $3,060
2nd tax year $4,900
3rd tax year $2,950
Each succeeding year $1,775
Depreciation table for trucks and vans placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation does not apply:
1s tax year $3,260
2nd tax year $5,200
3rd tax year $3,150
Each succeeding year $1,875
Stacie's Tax Stuff 